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MEES Regulations – Did you Heed the Warnings?

Last year we published an article outlining the new Minimum Energy Efficiency Standards (MEES) regulations that come into force for commercial properties on April 1, 2018. If you haven’t done anything about getting up-to-date energy efficiency surveys, or about taking remedial actions, time is running out.

Just to remind you, the new regulations will make it unlawful to let a commercial property where the Energy Performance Certificate (EPC) rating is ‘F’ or ‘G’. There is nothing to stop you selling a property with an ‘F’ or ‘G’ rating but it is highly likely there will be an impact on the selling price.

It should also be remembered that those with an existing rating above ‘E’ currently may be rated differently in the future, as the certificates only last 10 years.

Lettings covered by the MEES regulations include lease renewals and not just new lettings. Costs for upgrading a building could be significant or may be as easy as installing LED lighting or new boilers. There’s also the potential for lost rental income if a building is in a condition that renders it unlawful to let.

Exemptions and Exclusions

The situation regarding possible exclusions and exemptions from the MEES regulations is highly complex. We strongly recommend getting expert advice if you believe that MEES regulations might not apply to a property you own or for which you act as the landlord.

Recovering the money spent on energy efficiency upgrades from existing tenants may be difficult. You may also have to negotiate rights of entry with your tenants for remedial work to be completed if the timing doesn’t fit neatly into a void period. Steps you should have taken by now include:

Identification of which properties in your portfolio currently have a valid certificate and those which do not

Identification of those properties with historic assessments that could be rated down

Identification of relevant renewal and break dates in lease agreements

Commission of full or draft reports and cost surveys where there are no EPCs in place, or they are shortly to expire and where the leases are or potentially likely to end between now and after April

Planned and budgeted for potential works

The Future

Carbon reduction targets make it highly possible that the minimum EPC rating required for commercial lets could be raised. It may be worth considering this when planning works. From 2023, the regulations will also apply to existing leases.

If you haven’t yet prepared for the MEES regulations you need to act immediately. Hicks Baker can advise you on how the regulations will apply to the properties in your portfolio and help you put a plan in place- get in touch with us today.